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Twelve years and $1.1 billion later, a former trader for Daiwa bank is convinced he has finally done the right thing. “I no longer have any fear or guilt,” Toshihide Iguchi said, just prior to being sentenced for masterminding what Judge Lewis Kaplan called, “a crime of historical dimensions and potentially world-shattering implications.”
Iguchi knew he was in trouble, almost from the start of his adventure in fraud. He began small, in 1983, with a scheme to cover a $50,000 loss. Little did he know at that time that the whole thing would snowball, until 12 years later, he had made over 30,000 similar fraudulent trades. Before Iguchi was done, his actions had resulted in the resignation of the president of Daiwa bank in Japan and a Japanese deputy finance minister, as well as the indictment of Masahiro Tsuda, the manager of the New York branch of Daiwa Bank.
In 1993, when Iguchi finally came clean to his employers, telling them of his fraudulent trading, they simply asked him to keep quiet about it. But Iguchi’s conscience continued to bother him. In September 1996, he finally confessed what he had been doing to investigators from the US federal government.
The US attorney’s office credits Iguchi for its success in investigating the fraud. Without the 500 hours of interviews Iguchi gave them, the government might never have known that there was anything amiss since it is difficult for an outsider to tell which transactions are legitimate and which are not.
In court, Iguchi was characterized by his defense attorney as “a spectacularly unsuccessful trader.” His only success, according to the attorney, was that he was able to cover his losses until they reached over $1.1 billion.
Despite his cooperation with investigators, Iguchi’s bad luck continues. He has been sentenced to four years in prison and ordered to pay $2 million in fines and $570,000 in restitution. He also must forfeit his three cars, his house and his investment account. In addition, he has been ordered to continue cooperating with the government in its ongoing investigation of the scheme.
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